The Big Data Fix
by Carolyn Ellis Ms. Ellis is Features Editor for LIFE&Health Advisor. Connect with her by e-mail: email@example.com
After issuing their World Insurance Report 2015, Capgemini Consulting released “Fixing the Insurance Industry,” a white paper that demonstrates how insurers can use Big Data and customer analytics to transform their relationships with consumers and policyholders. Shane Cassidy is senior vice president with the consulting firm Capgemini Global Insurance Business. We spoke with him about his work with the global research and solutions provider and the bright future he sees for personalized product and servicing for life and annuity carriers.
L&HA: Capgemini Consulting has studied the insurance industry for almost a decade. Your 2015 World Insurance Report outlines how Big Data can transform customer satisfaction. How badly does the insurance industry need to be fixed?
SC: Insurance carriers have been burdened by some of the worst legacy platforms out there. Across the industry, many carriers are still working with platforms that are 30 – 40 years old, which have limited opportunity for data and poor agility.
How much can they modify products, adapt pricing, or use a different distribution strategy? Those things are driven through insight, through a Big Data strategy. Insurers want higher sales, improved underwriting, lower expenses, and better customer service. Having the data is part of the story. Doing something with it is actually where they make the money.
L&HA: The report highlights the need to shift from a product-centered to customer-centric approach.
SC: In the last 5-10 years we have seen an acceleration in the technology adoption space. Leading insurance carriers have replaced back-end systems, and now there’s focus on new business and customer centricity.
Historically, all insurers were defined by the products they sell. Because they set themselves up based on products, they built silos between every product. Large operating model changes are needed internally to allow insurers to put customers at the center of the organization.
One example: MetLife hired a Chief Customer Officer whose mission is to study the organization to determine how they can start changing things to put customers at the center, allowing them to look at data in their platforms and applications in a different way. Using customer analytics, as they get more and more information they’re able to target offers, opportunities, and interactions with the customer.
L&HA: How is this going to play out for agents and advisors?
SC: Insurers aren’t looking to cut agents out of the process. Most insurers are looking at ways that they can provide better support to customers. Every insurer I visit talks about how important their agent channel is. Their big concern is, “Will interacting directly with the end customer somehow create a concern for my agent?” I think agents should embrace the opportunity to be more of a value-added service, providing data that’s white labelled under their brand, which insurers are willing to do. This will create a more satisfied customer relationship experience.
L&HA: It seems there’s a new understanding of what it means to be tech-savvy, for agents and consumers.
SC: Another of our research studies was on Millennials and the obvious change that is happening with customers. An interesting finding was that Millennials feel strongly that they are not tech savvy people. In our eyes they are, but for them their iPhone and iPad are just a way of life.
They want access to data real-time. They don’t want to go through a bunch of channels. The personalization of Amazon or Apple creates the same expectation for their insurance company. They think, “They’ve got all the data, they should just be able to tell me, ‘What’s my premium? What’s my coverage?’”
At the end of the day, Millennials would prefer to talk to a human being to finalize their insurance coverage, but they’re going to do information gathering and servicing via digital channels. In addition, they said that they interact with their insurer once a month, which was a shocking number. These interactions occur across the insurance spectrum, from health and life to P&C. They consider Facebook or other social channels an interaction and oftentimes, a valuable interaction, as it all feeds into this Big Data story of how often, how reliably, and in how personalized a way we can start touching those customers.
L&HA: If insurance involves pooling risk, how does that change if you become customer-centric?
SC: Getting to personalization of product is where the market is definitely going. Even in a group health model, insurers want to know more and more about the individuals in that group. As an example, New York-based Oscar Health founded in 2013 is providing wearables to collect data on group members. This data can help them improve the groups once under contract and limit their risk.
L&HA: Then there are the issues of privacy and security. Do you really want a device in your car or a wearable on your body?
SC: We’re far from mature in this space. Big Data is a never-ending and renewing supply. There are teams of data scientists that go through this information to figure out what it really means. A great strategy is collect and modify. The guys that are doing it well pick out areas and do small test groups. Are we hitting the right mark? Is this data panning out? If not, let’s adjust. It’s very scientific at the end of the day to make that connection between data and activities and actions and what’s really happening on the other side of a gadget, a widget, a wristband, a car.
L&HA: Social mores are changing as young people forego marriage or have children outside of marriage, life events which traditionally trigger life insurance and other financial purchases.
SC: In some of our studies, the changing customer is absolutely changing more rapidly. Insurers are becoming more sophisticated, though, in understanding that. They’re always going to be playing a little catch up because you’ve got to see where the market is going, but even Millennials understand the importance of insurance. I think insurers will be able to overcome the trigger component. They need to focus on how to align their products and services with the expectations of ever-changing customers.
L&HA: A change of this magnitude can seem overwhelming. Should we be optimistic?
SC: We shouldn’t look at Big Data as a scary thing. Just like digital transformation, Big Data is a component of an overall business strategy. The tools and access that are available to insurers are changing. Customers are changing, and to some degree, distribution strategies are changing. But at the end of the day, companies are still trying to provide products that cover their customers and have profit available. With these new tools, we should be looking for better personalization, better servicing, and more, happy customers. With more enabled and informed agents and intermediaries between the insured and the insurer, I see a much happier and more ease-of-use customer interaction, which is very important if we’re all going to be successful. It’s all positive on our end, what we’re seeing from insurers, the investments they’re making and the opportunities available. These aren’t easy to do; they take time and a lot of money, but there is a lot of intent to improve and address the needs of insurance customers and their agents.